When you first see Bilwi from the air before landing on its tiny grass airstrip, your first thought is that you will be landing in the middle of a vast swamp. There are very few buildings, scattered cattle, and almost no people. It definitely doesn’t look like an urban area. But Bilwi is the capital of Nicaragua’s North Atlantic Autonomous region on the Caribbean Coast (RAACN). The 60,000-strong population of the RAACN is predominantly indigenous and Afro-descendant, and despite its constitutional autonomy, the RAACN is extremely isolated, both geographically and politically, and up to 75% of its population lives in poverty or extreme poverty.

Over the last decade, Latin America and the Caribbean have seen unprecedented development gains. Over 60 million people escaped poverty and over 100 million people entered into the middle class. For the first time in the history of the region, there are more people in the middle class than in poverty.

Over the past year and a half, a financial mechanism called social impact bonds (SIBs) has garnered excitement throughout Latin America as an alternative way to fund social programs – from governments and private investors, non-profits and social entrepreneurs from Mexico to Brazil, Colombia to Chile.

While SIBs may be new, they are, in many ways, like Public-Private Partnerships (PPPs), familiar to governments around the world and in particular to governments in Latin America and the Caribbean.